The Church of England’s investment arm, the Church Commissioners, is increasing its allocation to alternatives to 33%.

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A quarter of the £6 billion endowment’s portfolio is currently invested in alternatives and the plan is to grow this to a third of the portfolio, according to Roy Kuo, team head for alternative strategies. It intends to split this between hedge funds and those that are private equity or long/short equity.

The endowment has been adding opportunistic investments to its alternatives bucket, including US residential property, non-performing loans and acquiring aircraft to lease them. Now it is looking to add mortgage-backed securitisations to the mix, Kuo said.

The endowment is targeting returns of at least 10% a year from its alternative investments, according to Kuo. Last year the overall portfolio gained 15%.